Lackluster debut for crypto ETFs in Hong Kong

South Korean lawmakers are moving to seize control of the nation’s stalled second phase of digital asset legislation, aiming to bypass months of interagency gridlock and introduce a comprehensive regulatory framework by January. The legislative acceleration comes as Seoul races to align with global standards following the implementation of the U.S. GENIUS Act in July, a shift that has intensified pressure on local regulators to formalize oversight of the crypto sector. According to a report from the Maeil Business Newspaper, the ruling Democratic Party of Korea (DPK) plans to introduce the Digital Asset Basic Act as a lawmaker-sponsored bill rather than wait for a government submission. The procedural move is intended to ensure that formal deliberations can begin during the February provisional session. Lawmaker Kang Jun-hyeon, a DPK member of the National Policy Committee, told reporters on Dec. 11 that relying on the government’s timeline would jeopardize passage of the bill in the first half of next year. Kang cited points of disagreement among the parliament, the government, and industry stakeholders. Among the authorities, in particular, a standoff between the Bank of Korea (BOK) and the Financial Services Commission (FSC) over monetary policy and issuance authority has been a key source of delay.Photo by Lauren Seo on UnsplashDraft sets ‘major’ stablecoin requirementsAt the heart of the legislation is a new classification system for stablecoins. The government delivered its draft for the Digital Asset Basic Act to DPK’s Digital Asset Task Force, outlining its intention to classify won-denominated stablecoins exceeding a certain issuance threshold as “major digital payment tokens.” According to Blockmedia, citing sources familiar with the closed-door briefing to the task force, these assets would fall under a rigorous oversight framework developed in consultation with the central bank. Under the draft rules, issuers would be required to maintain 100% reserves, prohibited from making interest payments to holders, and obliged to submit detailed issuance plans to the FSC. Foreign-issued stablecoins would only be permitted to circulate domestically if the issuer establishes a local branch. Although the government ultimately submitted its draft to the DPK, the delivery was delayed by two days, missing the Dec. 10 deadline set by the party. Officials attributed the postponement to unresolved interagency disagreements. The central bank had argued that any issuance should require unanimous approval from all relevant agencies, including itself, but the government agreed to involve the bank only when a token is designated as “major.” The Bank of Korea continues to advocate for a bank-led consortium issuance model, highlighting the coordination challenges that have complicated the bill’s preparation. Supply thresholds emerge as fault lineCritics warn that the proposed regulations could inadvertently tilt the market against domestic innovation. Analysts argue that if the threshold for the "major" designation is set too low, new won-based issuers may face compliance costs that could undermine their business viability before they reach meaningful scale. They added that setting the bar for entrenched dollar-backed issuers such as USDT and USDC is also complex, given that their combined global issuance already exceeds $250 billion. Market participants said concerns about triggering the “major” designation could prompt Korean issuers to cap supply to avoid heightened scrutiny, effectively stifling growth from the outset. Despite these concerns, political will to close the policy vacuum is hardening. The DPK intends to move the legislation forward on its own timetable, incorporating the government’s input but steering the process through parliament. Lawmaker Kang emphasized that while numerous issues remain, the task force aims to narrow the debate to a few essential questions before the bill’s planned introduction in January. Industry representatives have largely welcomed the clearer timeline, viewing the move as a necessary step to reduce uncertainty as the global crypto sector comes under more formal regulatory oversight. 

UAE Emirate Launches Digital Asset Oasis Free ZoneRas Al Khaimah (RAK), one of the seven Emirates of the United Arab Emirates (UAE), has launched the RAK Digital Assets Oasis (RAK DAO), a free zone tailored exclusively for digital and virtual asset enterprises.Photo by Mostafa Ashraf Mostafa on UnsplashFrom conception to launchThe Emirate has been working on the RAK DAO project for some time, having enacted a law to establish the free zone in March of this year. In July it emerged that RAK Digital Assets Oasis had partnered with the HBAR Foundation, the project team behind the Hedera public ledger, with HBAR extending funding and resources to fuel the growth of free zone members.Having put in the hard yards to establish the free zone, RAK DAO, under the patronage of RAK Emirate ruler His Highness Sheikh Saud Bin Saqr Al Qasimi, had its launch event on Thursday. The event included a range of industry speakers including Ledger Chairman and CEO Pascal Gauthier, Animoca Brands Co-Founder and Executive Chairman Yat Siu, DFINITY Founder Dominic Williams, and TON Foundation President Steve Yun, among others.During the event, DAO creation and governance platform DeXe DAO Studio announced its partnership with RAK DAO.With an eye towards keeping the RAK Emirate ahead of the technological curve, RAK DAO aims for the digital assets oasis to become the world’s first free zone dedicated solely to digital and virtual asset companies. While RAK DAO is initially expected to focus on non-financial activities, it holds the potential to introduce financial activities at a later stage.Nurturing Web3 innovationThe mandate of RAK DAO is to provide robust support to companies engaged in cutting-edge technologies. This includes but is not limited to ventures in the metaverse, blockchain, utility tokens, virtual asset wallets, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), decentralized applications (DApps), and various other Web3-related businesses.Entrepreneurs who establish their presence within the confines of this free zone will be granted the privilege of retaining 100% ownership of their enterprises. Moreover, they will benefit from innovative tax schemes and a regulatory framework that is tailored to the unique demands of the digital asset industry.Progressive approach to Web3The UAE, as a nation, has actively pursued and courted crypto and blockchain firms by cultivating a progressive regulatory environment. Dubai led the charge by introducing a virtual assets law and establishing the Virtual Asset Regulatory Authority.RAK is not the first Emirate to establish a free zone that caters to crypto and Web3 business within the UAE. The Emirate of Abu Dhabi has established the Abu Dhabi Global Market (ADGM) while the Dubai International Financial Centre (DIFC) established its own financial regulator in Dubai, paving the way for attractive free zones for digital asset businesses. The Dubai Virtual Assets Regulatory Authority (VARA) even took its commitment a step further by inaugurating its headquarters in The Sandbox in May 2022.Dubai has issued operational licenses to several crypto firms, including prominent names like Binance, Crypto.com, and Nomura’s Laser Digital and digital asset custodian Komainu. These licenses have further solidified the UAE’s position as a preferred destination for crypto, blockchain, and Web3 enterprises.

Beosin Report: Crypto Rug Pulls Surpass DeFi Exploits in MayAccording to a recent report by blockchain security firm Beosin, losses from “rug pulls” or “exit scams” in the cryptocurrency space exceeded the amount stolen from decentralized finance (DeFi) projects during the month of May.The report, published on June 1 by Beosin Blockchain Security, revealed that rug pulls and scams resulted in losses of over $45 million across six incidents during the month. Beosin is headquartered in Chengdu, in China’s Sichuan province. The firm uses formal verification methods to secure smart contracts.In general there were 22 security incidents in the digital assets space over the course of the month. That overall figure accounts for losses totaling $20 million, and represents a vast improvement on the previous month.Three of the incidents were accounted for by security issues related to hardware wallets such as the Trezor and imKey wallets. Six were rug pulls/crypto scams, two were crypto crime incidents while another implicated a critical vulnerability relative to zero-knowledge proof technology.Photo by Tara Winstead on PexelsDeFi protocol attacksIn contrast, there were 10 attacks on DeFi protocols, amounting to $19.7 million in stolen funds. This figure represents a significant decrease of nearly 80% compared to April, and the losses from these types of exploits had been declining for two consecutive months, as per Beosin’s findings.The largest rug pull incident in May involved the alleged disappearance of $32 million associated with the crypto project Fintoch on May 24. Meanwhile, the largest attack on a DeFi platform was a $7.5 million breach targeting Jimbos protocol, according to Beosin’s report.Shifting hacker strategyBeosin noted a shift in the targeting strategy of hackers and scammers, who are now increasingly focusing their attacks on ordinary users rather than various project parties. To mitigate risks, the report recommended that crypto users enhance their anti-fraud awareness, conduct thorough due diligence before investing in projects, and learn how to improve the security of their digital assets.The report also issued a warning against using shared or public charging devices for mobile phones. Beosin highlighted the potential risks associated with these devices, as they could be manipulated to inject malicious programs that compromise private keys. This caution aligns with a similar advisory issued by the United States Federal Bureau of Investigation (FBI) in April.The FBI’s Denver office cautioned against using public USB ports, including those found at airports, due to the potential introduction of malware and monitoring software onto devices. Instead, they suggested carrying a personal charger and USB cord for use with electrical outlets.As the cryptocurrency landscape continues to evolve, it is crucial for users to remain vigilant and proactive in safeguarding their investments. With the rise of rug pulls and the ongoing threats in the DeFi space, staying informed, exercising caution, and adopting robust security measures are essential for protecting one’s digital assets in this rapidly changing industry.